Retirement income funds: A payout solution

If you want your retirement withdrawals to be as easy as possible, consider Vanguard Managed Payout Fund.

Keep control of your money, get regular payments

Vanguard Managed Payout Fund* is designed to give you regular monthly payments that, over time, keep pace with inflation. Because the fund also seeks to avoid drawing down your principal, your initial payment amount is based on an annual withdrawal of 4% of the money you invest.**

The Managed Payout Fund could be right for you if you:

Want to balance the income you receive with the protection of your principal—for example, if you plan to leave a legacy.

Want a consistent amount automatically withdrawn and sent to you monthly.

But keep in mind that another solution may be better if you think you'll need to withdraw varying amounts of money during retirement or if you need your initial withdrawal rate to be set higher or lower than 4%.

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Income

footnote**Research from Vanguard and other retirement income experts has found that, by limiting spending to 4% of a portfolio each year, retirees have a higher probability of maintaining a stable income stream—one that can be sustained over the typical retirement period of 20–30 years, even in a low-interest-rate environment.

Vanguard Managed Payout Fund isn't guaranteed to achieve its investment objectives and is subject to loss. In addition, some of its distributions may be treated in part as a return of capital. The dollar amount of the fund's monthly cash distributions could go up or down substantially from one year to the next and over time. It's also possible for the fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under its managed-distribution policy. An investment in the fund could lose money over short, intermediate, or even long periods of time because the fund allocates its assets worldwide across different asset classes and investments with specific risk and return characteristics. Diversification doesn't ensure a profit or protect against a loss in a declining market. The fund is proportionately subject to the risks associated with its underlying funds, which may invest in stocks (including stocks issued by REITs), bonds, cash, inflation-linked investments, commodity-linked investments, long/short market-neutral investments, and leveraged absolute return investments.

The Managed Payout Fund may not be appropriate for all investors. For example, depending on the time horizon, retirement income needs, and tax bracket, an investment in the fund might not be appropriate for younger investors not currently in retirement, for investors under age 59½ who may hold the fund in an IRA or other tax-advantaged account, or for participants in employer-sponsored plans. Investors who hold the fund within a tax-advantaged retirement account should consult their tax advisors to discuss tax consequences that could result if payments are distributed from their account prior to age 59½ or if they plan to use the fund, in whole or in part, to meet their required minimum distribution (RMD) obligations. Distributions from the fund are unlikely to precisely match an investor's IRA RMD obligations. In addition, use of the fund may be restricted in employer-sponsored plans by the terms of the governing plan documents and/or at the discretion of the plan administrator. Review the information carefully with your financial advisor before deciding whether the fund is right for you.

All investing is subject to risk, including the possible loss of the money you invest.